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The “independent inquiry” announced by David Lammy into the crisis at London Metropolitan University is nothing more than an ongoing exercise commissioned by the Higher Education Funding Council for England, it has emerged.

The Higher Education Minister appeared to promise a new inquiry in Parliament earlier this week. However, his department has now said that he was referring to a continuing investigation by Hefce into the “lessons to be learnt” from the debacle.

More than 500 jobs are set to go at London Met after Hefce said it may claw back £31.5 million that it had overpaid because of inaccurate data submitted by the university on its student completion rates.

After a debate in the House of Commons on 20 May, in which Hefce was accused by MPs of “colluding” with the university over the inaccurate data, Mr Lammy said: “There will, of course, be an independent inquiry, and an inquiry by the National Audit Office into the financial arrangements for universities, which will have particular regard to the London Met situation.”

However, the Department for Innovation, Universities and Skills has now said that there will be no new independent inquiry.

Hefce revealed in May, in response to a Freedom of Information Act request, that it had commissioned an “independent lessons-learnt exercise into our role” in the crisis.

DIUS said that Mr Lammy was referring to this inquiry, which is due to report to Hefce’s board in July.

The NAO study cited by the minister is looking at the financial health of the higher education sector in general – as part of this, it will “consider the position at London Met”.

The confusion has prompted MPs to demand an apology from the Higher Education Minister.

Diane Abbott, Labour MP for Hackney North and Stoke Newington, was one of those to suggest that there may have been a degree of collusion between Hefce and London Met.

She said: “I’m very disappointed that David Lammy misled the House, and I will be joining colleagues like Jeremy Corbyn [Labour MP for Islington North] in pressing for an apology.”

The University and College Union also accused the Government of misleading the public and shirking its responsibility over its refusal to conduct a fully independent inquiry.

Sally Hunt, the UCU general secretary, said: “We are quite astounded by the Government’s U-turn.

“On Wednesday, the minister said there will be an inquiry, not that there was one currently under way behind closed doors. He has either misled Parliament or performed an incredible about-turn; neither action is acceptable.”